Supreme Court New South Wales Medium Neutral Citation: Timothy Mills v Walter Wojcech [2011] NSWSC 86 Hearing dates: 3 and 4 February 2011 Decision date: 17 February 2011 Before: Acting Justice Barr Decision: See paragraph [112] of the judgment Catchwords: Evidence - client legal privilege - documents produced on subpoena by third party - no claim of privilege made - whether privilege lost. Legislation Cited: Evidence Act 1995 (NSW) Landlord and Tenant (Amendment) Act, 1948 Cases Cited: Akins & Ors v Abigroup Limited (1998) 43 NSWLR I39 Attorney General for the Northern Territory v Maurice & Ors, an unreported judgment of the High Court of Australia BT Australasia Pty Limited v State of New South Wales (No.8) (1998) 154 AL 202 Director of Public Prosecutions v Kane (1997) 140 FLR 468 Guinness Peat Properties Limited & Anor v Fitzroy Robinson Partnership [1987] 1WLR 1027 Mann v Carnell [1999] HCA 66 Mann v Carnell (1999) 201 CLR 1 Meltend Pty Limited v Restoration Clinics of Australia Pty Limited (1997) 75 FCR 511 Pitts v Adney [1961] NSWR 535 McFadden v Snow (1951) 69 WN NSW 8 Grace v Grace (2010) NSWSC 1514 Sovereign Motor Inns Pty Limited v Bevillesta Pty Limited [2000] NSW SC 521 Tim Barr Pty Limited v Narui Gold Coast Pty Limited [2008] NSWSC 1070 Unsworth v Tristar Steering and Suspension Australian Limited [2007] FCA 1081 Category: Separate question Parties: Timothy Mills (Plaintiff) Walter Wojcech (Defendant) Insurance Manufactures of Australia P/L (Cross-Defendant) Representation: Counsel: A J Bartley SC / S Tzouganatos (Plaintiff) M L Williams SC / D M Wilson (Cross-Defendant) A J Black SC / M L Davies (Defendant) Solicitors: Maurice Blackburn Lawyers (Plaintiff) Walsh & Blair (Defendant) Hunt & Hunt Lawyers (Cross-Defendants) File Number(s): 2006/266877 JUDGMENT 1HIS HONOUR: The plaintiff, Timothy Mills, was injured on 19 February 2002 while he was water skiing. He has sued the driver of the boat which was towing him, Walter Wojcech, for his resulting loss and damage. Mr Keith Leslie Wallis was observer on the boat at the time. 2Mr Wojcech has joined as cross-defendant the insurer of the boat, Insurance Manufacturers of Australia Pty Limited (the insurer). 3In this motion Mr Mills seeks a declaration that certain documents in the possession of the insurer, being copies of documents produced to the court on subpoena, are documents to which client legal privilege attaches and the consequential order that they be returned to the Court. The documents the subject of the motion 4The accident happened on the River Murray in New South Wales. Mr Mills, who resided in Victoria, first consulted a solicitor in that state. On 5 July 2004 he attended the office of Ryan Carlisle Thomas, solicitors, and spoke to a solicitor, Mr Wubbeling. With him were Mr Wojcech and Mr Wallis. Mr Wubbeling interviewed the three men together and then separately. He used his notes to produce a typed account of what they had said. 5The substance of the conversations was this. During the initial joint interview Mr Mills said that it was a busy time of year and that there were other boats on the river. He was riding on a knee board. He signalled to Mr Wallis to make a turn. A number of other boats had just gone past, leaving a wake of "rollers" up to half a metre high. There was some disagreement about the cause of the accident. Mr Wubbeling asked whether it could have been caused because Mr Wojcech was driving too fast. Mr Wojcech disagreed and said that the accident happened only because the boat struck the wake of passing boats as it made a turn. Mr Wubbeling asked him whether it had been a mistake not to wait for the wave to subside before turning. Mr Wojcech said that there was no such rule or practice. Mr Wallis said that the manner in which Mr Wojcech turned was normal and safe. He said that a turn in those conditions might be performed 100 times a day and that on one occasion an accident like this might happen. Mr Wojcech and Mr Wallis used expressions like "freak accident" and "unforeseeable" 6Mr Wubbeling interviewed Mr Mills alone and told him that on the basis of what he had been told his claim would face considerable difficulties and that according to Mr Wojcech and Mr Wallis his injuries were not caused by the driver. 7Mr Mills became animated and said that he believed that Mr Wojcech and Mr Wallis were concerned about the consequences of the claim for them personally. He asked Mr Wubbeling to reassure them that there was insurance and that they would not have to meet any resulting expense themselves. If he did so, he said, they would be more forthcoming with the truth. 8Mr Wubbeling spoke to Mr Wojcech alone. He told him that there was insurance and that he should not be concerned about having to meet costs resulting from the accident. Mr Wojcech said that the accident was caused by his negligence and that he should have waited for the wake to subside before turning. He said that he had turned too quickly for the conditions. 9Mr Wubbeling spoke to Mr Wallis and gave him a similar reassurance. Mr Wallis spoke about the limited space available for turning in rivers as compared to lakes. He said that he thought that Mr Wojcech had driven too quickly at the start of the turn. Later he said that he was going at least twice as fast as he ought at the time. 10Mr Wubbeling and Mr Mills then spoke about other matters. 11It was realised that any legal proceedings would have to be brought in New South Wales and Mr Mills decided to transfer his instructions to a New South Wales firm. During 2004 he appointed his present solicitors, whom I shall refer to as Maurice Blackburn, to act for him. They arranged for Ryan Carlisle Thomas to send their file. Ryan Carlisle did so, but kept a copy of it. Maurice Blackburn commenced an action by statement of claim filed in the District Court at Sydney. By order of this court on 4 April 2006 the proceedings was transferred to this court. The production and inspection of the documents 12On 5 September 2006 subpoenas were issued at the request of Abbott Tout, the solicitors then acting for Mr Wojcech. Abbott Tout were also instructed by the insurer. One of the subpoenas was directed to Ryan Carlisle Thomas and required production of these documents: (1)A copy of this subpoena. (2)All notes, correspondence, reports, statements, memoranda, results, photographs, video recordings, computer print-outs, records, drafts and any other documents relating to an alleged water skiing/knee-boarding accident suffered by the plaintiff on 19 January 2002 (name: Timothy John Mills; date of birth: 9 June 1967; address: 147 Seventh Avenue, Eden Park, VIC, 3757). (3)All documents contained in your file with reference SW:RT204/3351. 13The subpoena was returnable on 28 September 2006. At the same time Mr Leonard, who was assisting Mr Matkovich, the solicitor having the carriage of the matter, wrote a letter to Maurice Blackburn informing them that the subpoenas had been issued and were returnable on 28 September 2006 at 9:00am. He enclosed copies of the subpoenas. 14Three solicitors gave evidence on the motion. Ms Theodora Ahilas is the solicitor who now has carriage of Mr Mills' action in the office of Maurice Blackburn. (Mr Carmine Santone, who had carriage at relevant times, was not called to give evidence). Ms Renae Hamilton has conduct of the insurer's case. Their affidavits were read and they were not cross-examined. Mr Jason Leonard, for the insurer, made an affidavit and was cross-examined. Documents that were brought into existence at the time of the subpoena were put before the Court. The Court examined its own file. 15Copies of documents annexed to Mr Leonard's affidavit of 3 November 2010 appear to show that no documents were produced by the return date of the subpoena. Mr Leonard does not remember. The court record is silent. Annexure C to Mr Leonard's affidavit is a copy of the first page of the subpoena bearing a stamp that shows that it was received by the exhibits clerk of the Court on 3 October 2006. Also prominently written on the document is the date 28/9/06 and, under it, in large capitals: "LATE". 16In my opinion the proper implication of this evidence is that Ryan Carlisle Thomas produced documents corresponding with the description in the schedule to the subpoena on 3 October 2006. 17Annexure D to Mr Leonard's affidavit is a copy of a form of application for leave to uplift and copy documents. It is dated 22 November 2006 and refers in part to "packet 15" produced by Ryan Carlisle Thomas Lawyers. It notes that access was granted on 13 November 2006. Mr Leonard does not remember and the evidence does not otherwise show who applied to the Court for access to the documents or when or who was present when access was granted. 18Other documents annexed to Mr Leonard's affidavit show that the documents were uplifted and copied, and that explains how the insurer came by them. 19The earliest court records are of 10 August 2006 and 3 November 2006, but they are confined to orders for service of evidence and the provision of particulars. There appears to be no court record of these subpoenas, of any document produced or of any order affecting any such document. 20On 12 February 2007 Hunt & Hunt began acting for Mr Wojcech. Mr Matkovich continued to have the conduct of his case and Mr Leonard to assist him. The denial of indemnity 21On 8 August 2007 and again on 24 August 2007 Hunt & Hunt wrote to Mr Wojcech in these terms: We refer to the proceedings commenced by Timothy John Mills against you in respect of a boating accident which occurred on 19 January 2002. As you are aware, indemnity was claimed by you under a policy of insurance issued by RACV to David Mills. We have been acting on instructions from the insurer in respect of the claim, on your behalf. As a result of material which has recently come to our attention, we give you notice of our client's intention to refuse your claim for coverage under the policy and decline indemnity and our intention to cease acting for you on the following grounds: 1. You have not been truthful in statements made in connection with the claim; 2. You have no been frank in statements made in connection with the claim; 3. You have made admissions in connection with the claim, without our agreement. In addition, our client declines indemnity in respect of your claim for coverage under the policy on the basis that, at the relevant time, you were driving the boat without the knowledge of, or having first obtained permission of its owner. These proceedings are next before the Court on 10 August 2007. We intend to inform the Court, at that time, of our intention of ceasing to act on your behalf and in that regard, we enclose , by way of service, notice of ceasing to act. 22On 9 August 2007 Hunt & Hunt wrote to Maurice Blackburn saying this, in part: We advise that as a result of materials which have come to our attention, we are instructed to decline indemnity and therefore cease acting on behalf of the defendant. 23Hunt & Hunt did not say in the letter what material they were referring to. They ceased to act for Mr Wojcech. He appointed a firm, Walsh & Blair, to act for him. On his behalf they initiated the cross-claim against the insurer. The insurer instructed Hunt & Hunt to act for it. 24The matter continued to be prepared for hearing and representatives of the parties appeared before the Court from time to time. It was not until 17 October 2008, however, that Maurice Blackburn realised that the material referred to in Hunt & Hunt's letter of 9 August 2007, on the strength of which they declined indemnity to Mr Wojcech, had come from Ryan Carlisle Thomas' file. Apparently counsel for the insurer said as much at a settlement conference held on that day. Privilege claimed and denied 25On 4 November 2008 Maurice Blackburn wrote to Hunt & Hunt in the following terms: We refer to the recent settlement conference and to your client insurer's continuing refusal to indemnify the defendant. In our view, such a position is simply adding costs and complexity to the matter. It is clear that the defendant is entitled to seek indemnity from the insurer. The purported grounds for denial of indemnity seemed to relate to alleged misconduct on the part of the defendant. Presumably, this relates to what it is alleged the defendant said in a conversation with the plaintiff's previous solicitor. In this regard, we make the following observations: 1. The plaintiff has not waived privilege over the previous solicitors' file and the fact that it is in your hands as a result of a mistake does not alter this position. In these circumstances, we must insist that the documents be returned. 2. Even if the defendant had a discussion with the plaintiff's previous solicitors along the lines which you assert, it is our respectful view, endorsed by advice from counsel, that this could not possibly provide grounds for the insurer to deny indemnity. 3. In an effort to resolve this matter, we are prepared to undertake on behalf of the plaintiff that he will not place any reliance whatsoever on any purported interview conducted by the previous solicitor with the defendant. The plaintiff will not seek to prove his case in any way on the basis of any alleged admissions made by Mr Wojcech to the plaintiff's previous solicitor. We request that you seek your client's instructions and advise as to your position within 21 days of the date of this letter. 26There was no reply. They wrote again to the same effect on 14 January 2009. Although Ms Ahilas said that there was no response, I am satisfied that on 17 March 2009 Hunt & Hunt wrote a letter in reply. After referring to "your purported claim for privilege" they continued: As to the previous solicitor's file, you may recall that the said documents were provided under subpoena to the Court in approximately October 2006. We are not aware that any claim for privilege was made at the time of production, nor indeed on any occasion prior to this request. In circumstances where the said documents have been available to all parties to these proceedings for over 2 years, we consider that any claim for privilege, which is not conceded, has been waived given the length of time that has passed, and the inaction on the part of any party to these proceedings to take any further steps to make such a claim. Furthermore, our client has acted in reliance of those documents in its conduct of these proceedings and will, therefore, contest any late claim for privilege on the basis that if it is asserted that the documents are privileged, the inaction of the parties to make any such claim is itself a waiver of privilege. 27The parties have continued to prepare the matter for hearing. Mr Mills might expect to be offered a date for hearing this year. 28Mr Mills' notice of motion was filed on 17 September 2010. 29Mr Mills swore an affidavit in which he said that he did not know about the subpoena served on Ryan Carlisle Thomas or that they had produced their file. He did not and does not consent to its production. He maintains his claim of privilege over the communications recorded in the documents produced by Ryan Carlisle Thomas. He was not required to be present for cross-examination. Did Maurice Blackburn know about the subpoena? 30A number of issues of fact arose on the evidence. The first was whether Hunt & Hunt had informed Maurice Blackburn that the subpoena had been issued. Plainly, letters capable of doing so were raised by Mr Leonard. In his letter of 6 September 2006 he listed the persons on whom six subpoenas were intended to be served and enclosed copies. The letter was apparently correctly addressed to Maurice Blackburn's document exchange box. Mr Leonard said that the subpoena was served under cover of the letter. 31Ms Ahilas' evidence on this subject appeared in paragraph 20 of her affidavit of 17 September 2010 thus: I have perused my file. According to my file, prior to the production of the documents by the plaintiff's former solicitor, Maurice Blackburn had not received notification or a copy of the subpoena addressed to the plaintiff's former solicitor. Consequently, the documents produced the subject of this subpoena were never inspected nor privilege claimed by my firm. If Maurice Blackburn had become aware of the subpoena and the fact that the former solicitors proposed to produce their file, I would have ensured that a representative from my firm claimed privilege over the entirety of the contents of the file on behalf of the plaintiff. 32I accept that Mr Leonard's letter was sent, enclosing a copy of the subpoena intended to be served on Ryan Carlisle Thomas. The ordinary inference would be that, in the absence of evidence to the contrary, the letter and its enclosures were received by Maurice Blackburn in the ordinary course of delivery through the document exchange. I do not think that that inference is rebutted by Ms Ahilas' evidence of a failure to find the document in her file in a search carried out on a day which was not identified but which I take to have been recent. There may be other reasons why the documents were not in the file at that time. I assume, judging by Ms Ahilas' evidence that Hunt & Hunt did not reply to the letters of 4 November 2008 and 14 January 2009, that Hunt & Hunt's letter of 17 March 2009 was not in the file either. 33I think that Maurice Blackburn received Hunt & Hunt's letter and a copy of the subpoena intended to be served on Ryan Carlisle Thomas. Did Maurice Blackburn know that Ryan Carlisle Thomas had produced their file? 34The next issue was whether Maurice Blackburn knew that Ryan Carlisle Thomas had produced their file. There is no evidence whether anyone attended court on 28 September 2006, the return date for subpoenas. Mr Leonard said that he did not attend and did not know whether anyone from Hunt & Hunt attended. If anyone did, he did not know who. His evidence that documents were produced on 3 October 2006 depended on the documents annexed to his affidavit, as did his conclusion that access was granted on 13 November 2006. 35Mr Leonard did not communicate with Maurice Blackburn about documents produced under the subpoena. He gave this evidence at T21-22: Q. Is it not the case that you sought and obtained that access after you found out that documents had been produced? A. Yes. Q. Did you notify the plaintiff's solicitors that you were going to seek that access? A. I don't think I did. Q. Why not? A. I can't recall. Q. Would it not have been at least a matter of professional courtesy to have done so? A. I can't recall what happened, but I can recall being satisfied that they were aware of what the situation was in terms of the documents. Q. Mr Leonard, all you could have been satisfied of is the fact that you told them that you had issued a subpoena. You could not have had any information that satisfied you of their knowledge that you were seeking access to those documents, isn't that right? A. I can't recall the specifics, but looking back, I can recall feeling comfortable that they were aware that the subpoena had been issued. Q. You knew that no one had turned up for the plaintiff's side on the return of subpoena, didn't you? A. I can't recall. Q. If you had known that, would you not, as a matter of courtesy at least, have notified the plaintiff's solicitor that they had not turned up on the return of the subpoena? A. I would have, yes. Q. Don't you think it would have been appropriate to tell them before you got the access order? A. If they didn't turn up, or we obtained another access order that they weren't aware of, then it is my practice to inform the other side of this new return date. I can't recall what exactly went on, but I do feel satisfied that at the time I had satisfied myself that they were aware of what was going on in terms of the documents. Q. Aware simply that you had issued a subpoena which was returnable for 28 September; that's all you could be satisfied of as to their knowledge, isn't it? A. When I look at the available documents now, that is the only document of me contacting them about the subpoena, but trying to recollect what happened, it is very difficult, but I felt confident at the time that they were aware that the documents had been produced. and at T22-23: Q. So is this the position then: All that you can tell the court about telling the plaintiff's solicitor anything, is that you wrote them a letter saying you were issuing a subpoena returnable for 28 September and you have no information to assist the court as to whether you took any steps whatsoever after that, right up to the time when you photocopied and read the documents, suggesting that you had provided any further information to the plaintiff's solicitor about these documents; that's a fair summary, isn't it, of your position? A. Yes. I think that summary is based on that I didn't think it was necessary to inform them of what was going on with the documents, because I'm pretty sure that they were aware of it. Q. Pretty sure, of what? A. That they were aware that the documents had been produced. Q. How did they know that? A. I can't recall now. 36Ms Ahilas does not claim to have any recollection of the events. She bases her conclusions on the absence of any file record and her acceptance that Maurice Blackburn did not raise any claim of privilege. 37The evidence of Mr Leonard is not strong, because he cannot tie to any particular event his feeling of confidence, first deposed to four years later, that Maurice Blackburn knew that Ryan Carlisle Thomas had produced documents. 38Maurice Blackburn knew what was in Ryan Carlisle Thomas' file and that the firm was to be served with a subpoena to produce the file. However, there is no evidence that Ryan Carlisle Thomas informed them that they had been subpoenaed to produce their file or that they were producing it. 39Mr Williams commented on the fact that nobody from Ryan Carlisle Thomas was called to give evidence about the production of the subpoenaed documents or about anything that might have been said or done at the time. In view of the time that has elapsed since that event I would not have been confident that any such person concerned, if able to be identified, would have retained a reliable memory about the matter. I draw no inference. 40Mr Santone was not called to give evidence, and Mr Williams commented about that. I doubt whether, more than four years later, Mr Santone would have had any reliable recollection of the events, and that alone prevents my drawing the inference that his evidence would not have assisted Mr Mills' case. But even if the inference were available it could not lead to a conclusion that he was told that Ryan Carlisle Thomas had produced their file. It would not be permissible to infer that his evidence would have damaged Mr Mills' case. 41It does not appear that anybody told Maurice Blackburn that the file had been produced to the court. If that is correct, they could only have ascertained the fact by their own searches. The evidence is silent about that. Ms Ahilas' evidence that "consequently the documents... were never inspected..." seems to have been arrived at by inference rather than from recollection. 42The evidence of Mr Mills' side is unsatisfactory. As I have said, the present state of Maurice Blackburn's file does not necessarily reflect what happened. But the court cannot convert the file's inability to show that something did not happen into evidence that something did. The issue simply has to be determined on a paucity of evidence. 43Two things that might bear on the question are the fact that Maurice Blackburn knew that Ryan Carlisle Thomas were to be subpoenaed to produce their file and the evidence of Mr Leonard's feeling about Maurice Blackburn's knowledge. The former weakly supports the proposition that Maurice Blackburn knew that Ryan Carlisle Thomas had produced its file but does not alone satisfy me that they did know. The latter has virtually no weight. 44A third consideration is the fact that Maurice Blackburn did not raise a claim of privilege. It seems highly likely that if Maurice Blackburn had known that Ryan Carlisle had produced its file they would have claimed privilege, since they knew from their own file what Mr Wubbeling had recorded. I think that the inference arising from the absence of the claim of privilege outweighs the two other considerations together. I do not think that Maurice Blackburn knew that Ryan Carlisle Thomas had produced their file to the court. When did Maurice Blackburn learn that the insurer had Mr Wubbeling's documents? 45The next issue was what was the earliest date on which Maurice Blackburn realised that the insurer was in possession of the notes and typed account prepared by Mr Wubbeling. 46A good deal of correspondence passed between Hunt & Hunt and Walsh & Blair. Hunt & Hunt were asserting that Mr Wojcech had been untruthful, had not been frank and had made admissions entitling the insurer to decline indemnity. Walsh & Blair asked for particulars of those assertions and in a letter of 15 February 2008 Hunt & Hunt gave the particulars requested. The letter included this: We first became aware of the fact that Mr Wojcech's statements were untruthful when we obtained access to documents produced under subpoena by Ryan Carlisle Thomas Lawyers. Those documents were produced to the court on 28 September 2006 and were subsequently inspected on behalf of NRMA. 47There is no evidence that Maurice Blackburn were made aware of any of that correspondence, but it was submitted by Mr Williams of Senior Counsel for the insurer that Mr Mills must have known about it since he and Mr Wojcech were such good friends and since had such a strong interest in Mr Mills' claim. The Court was invited to infer that they had discussed those matters and that Mr Mills must have realised by the dates of the correspondence that in declining liability the insurer was relying on the things Mr Mills and Mr Wojcech had said to Mr Wubbeling. 48While it is possible that Mr Wojcech mentioned these matters to Mr Mills, the evidence seems to me to fall short of proving that he did. I think that it would be unsafe to infer that he did. 49I do not think that Hunt & Hunt's reference to "material" in their letter of 9 August 2007 ought to have alerted Maurice Blackburn to the possibility that its source was the file produced by Ryan Carlisle Thomas. 50There was no challenge to the evidence that it was at the settlement conference on 17 October 2008 that Maurice Blackburn realised for the first time that the material referred to in Hunt & Hunt's earlier letter comprised Mr Wubbeling's written notes and typed account. 51I am satisfied that it was not until the settlement conference on 17 October 2008 that anyone on Mr Mills' behalf realised that privileged documents had been copied and used by the insurer. Maurice Blackburn wrote to Hunt & Hunt in proper time and I do not think that their not asserting any claim of privilege before then amounted to conduct inconsistent with a claim of privilege. The relevant law 52Division 1 of Pt 3.10 Evidence Act 1995 (NSW) deals with client legal privilege and its loss. There are these definitions in s117: "client" includes the following: (a) a person or body who engages a lawyer to provide legal services or who employs a lawyer (including under a contract of service), (b)an employee or agent of a client, ... "confidential communication" means a communication made in such circumstances that, when it was made: (a) the person who made it, or (b) the person to whom it was made, was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law. "confidential document" means a document prepared in such circumstances that, when it was prepared: (a) the person who prepared it, or (b) the person for whom it was prepared, was under an express or implied obligation not to disclose its contents, whether or not the obligation arises under law. 53Section 118 provides: 118 Legal advice Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication made between the client and a lawyer, or (b) a confidential communication made between 2 or more lawyers acting for the client, or (c) the contents of a confidential document (whether delivered or not) prepared by the client, lawyer or another person, for the dominant purpose of the lawyer, or one or more of the lawyers, providing legal advice to the client. 54Section 119 provides: 119 Litigation Evidence is not to be adduced if, on objection by a client, the court finds that adducing the evidence would result in disclosure of: (a) a confidential communication between the client and another person, or between a lawyer acting for the client and another person, that was made, or (b) the contents of a confidential document (whether delivered or not) that was prepared, for the dominant purpose of the client being provided with professional legal services relating to an Australian or overseas proceeding (including the proceeding before the court), or an anticipated or pending Australian or overseas proceeding, in which the client is or may be, or was or might have been, a party. 55Relevantly, s 122 provides: (1) This Division does not prevent the adducing of evidence given with the consent of the client or party concerned. (2) Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120. (3) Without limiting subsection (2), a client or party is taken to have so acted if: (a) the client or party knowingly and voluntarily disclosed the substance of the evidence to another person, or (b) the substance of the evidence has been disclosed with the express or implied consent of the client or party. (4) The reference in subsection (3) (a) to a knowing and voluntary disclosure does not include a reference to a disclosure by a person who was, at the time of the disclosure, an employee or agent of the client or party, or of a lawyer of the client or party, unless the employee or agent was authorised by the client, party or lawyer to make the disclosure. (5) A client or party is not taken to have acted in a manner inconsistent with the client or party objecting to the adducing of the evidence merely because: (a) the substance of the evidence has been disclosed: (i) in the course of making a confidential communication or preparing a confidential document, or (ii) as a result of duress or deception, or (iii) under compulsion of law, or (iv) if the client or party is a body established by, or a person holding an office under, an Australian law-to the Minister, or the Minister of the Commonwealth, the State or Territory, administering the law, or part of the law, under which the body is established or the office is held, or (b) of a disclosure by a client to another person if the disclosure concerns a matter in relation to which the same lawyer is providing, or is to provide, professional legal services to both the client and the other person, or (c) of a disclosure to a person with whom the client or party had, at the time of the disclosure, a common interest relating to the proceeding or an anticipated or pending proceeding in an Australian court or a foreign court. Did Maurice Blackburn act in a way inconsistent with the claim of privilege? 56This motion raises the question whether Maurice Blackburn, in acting for Mr Mills, have acted, according to subs (2), in a way that is inconsistent with his objecting to the adducing of evidence of the communications recorded in Mr Wubbeling's documents because it would result in the disclosure of a kind referred to in s118 or s119. 57In Mann v Carnell [1999] HCA 66; 201 CLR 1 Gleeson CJ, Gaudron, Gummow and Callinan JJ said at [28], [29]: [28] At common law, a person who would otherwise be entitled to the benefit of legal professional privilege may waive the privilege. It has been observed that "waiver" is a vague term, used in many senses, and that it often requires further definition according to the context. Legal professional privilege exists to protect the confidentiality of communications between lawyer and client. It is the client who is entitled to the benefit of such confidentiality, and who may relinquish that entitlement. It is inconsistency between the conduct of the client and maintenance of the confidentiality which effects a waiver of the privilege. Examples include disclosure by a client of the client's version of a communication with a lawyer, which entitles the lawyer to give his or her account of the communication, or the institution of proceedings for professional negligence against a lawyer, in which the lawyer's evidence as to advice given to the client will be received. [29] Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is "imputed by operation of law". This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. Thus, in Benecke v National Australia Bank, the client was held to have waived privilege by giving evidence, in legal proceedings, concerning her instructions to a barrister in related proceedings, even though she apparently believed she could prevent the barrister from giving the barrister's version of those instructions. She did not subjectively intend to abandon the privilege. She may not even have turned her mind to the question. However, her intentional act was inconsistent with the maintenance of the confidentiality of the communication. What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large. 58In Attorney General for the Northern Territory v Maurice & Ors , an unreported judgment of the High Court of Australia, Gibbs CJ said this: The rule which recognises legal professional privilege goes back at least to the time of Elizabeth I (see Wigmore on Evidence, McNaughton rev, vol VIII, para 2290) but that does not mean that it is archaic, technical or outmoded. Without the privilege, no one could safely consult a legal practitioner and the administration of justice in accordance with the adversary system which prevails at common law would be greatly impeded or even rendered impossible. This has been recognised in many cases: see, for example, Grant v Downs (CLR) at p 685; R v Bell,; Ex parte Lees (1980) 146 CLR 141 at 152 ; 30 ALR 489; Baker v Campbell (1983) 153 CLR 52 at 66, 94, 114 ; 49 ALR 385. In the last-mentioned case, the majority of the court described the rule as fundamental or essential (see (CLR) at pp 88, 95, 116-17, 131-2) and held that it was not confined to judicial or quasi-judicial proceedings. However, like every privilege properly so called it can be waived, although only by the person entitled to claim it, that is the client, and not the client's legal representative. There was of course no express waiver in the present case and there is nothing to suggest that the claimants had any actual intention to waive privilege in the source documents. The principle applicable in these circumstances seems to me to be well stated in Wigmore , op cit, para 2327: In deciding it, regard must be had to the double elements that are predicted in every waiver, ie, not only the element of implied intention, but also the element of fairness and consistency. A privileged person would seldom be found to waive, if his intention not to abandon could alone control the situation. There is always also the objective consideration that when his conduct touches a certain point of disclosure, fairness requires that his privilege shall cease whether he intended that result or not. He cannot be allowed, after disclosing as much as he pleases, to withhold the remainder. He may elect to withhold or to disclose, but after a certain point his election must remain final. 59In the present case there was no express waiver and the question is whether waiver was implied or imputed by any inconsistency with which Mr Mills' case was conducted. There is no voluntary waiver of privilege where disclosure of documents is made in compliance with an enforceable legal obligation: Akins & Ors v Abigroup Limited (1998) 43 NSWLR I39. Ryan Carlisle Thomas were no longer acting as Mr Mills' solicitors and produced their file only under the compulsion of the subpoena. Their disclosure did not therefore constitute a voluntary waiver of privilege. 60By s122(2) it is the client or party concerned whose action may be held inconsistent with the claim of client legal privilege. The client or party concerned was Mr Mills. He would have been bound by the actions of Maurice Blackburn as his agent: see para (b) of the definition of "client" in s117. But Ryan Carlisle Thomas was not Mr Mills' agent and had no authority to waive privilege. 61Counsel referred the court to a number of decided cases dealing with loss and asserted loss of privilege. In Guinness Peat Properties Limited & Anor v Fitzroy Robinson Partnership [1987] 1WLR 1027 the defendants served on the plaintiff a list of documents as required by rules of court. The list separated the documents over which privilege was claimed from those over which there was no claim. A privileged letter, over which the defendants intended to claim privilege, was identified in the wrong part of the list and the result was that the letter came unintentionally into the hands of the plaintiff, who read it. It was held on appeal to the English Court of Appeal that the plaintiff's solicitors must have realised when they inspected the letter that it was by mistake that the letter had been discovered without a claim of privilege. The law did not encourage parties or their solicitors to take advantage of obvious mistakes made in the course of the process of discovery. Slade LJ said this at 1045: (1) Where solicitors for one party to litigation have, on discovery, mistakenly included a document for which they could properly have claimed privilege in Part 1 of Schedule 1 of a list of documents without claiming privilege, the court will ordinarily permit them to amend the list under R.S.C., Ord. 20, r. 8, at any time before inspection of the document has taken place. (2) However, once in such circumstances the other party has inspected the document in pursuance of the rights conferred on him by R.S.C., Ord. 24, r.9, the general rule is that it is too late for the party who seeks to claim privilege to attempt to correct the mistake by applying for injunction relief. Subject to what is said in (3) below, the Briamore decision [1986] 1 W.LR. 1429 is good law. (3) If, however, in such a last mentioned case the other party or his solicitor either (a) has procured inspection of the relevant document by fraud, or (b) on inspection, realises that he has been permitted to see the document only by reason of an obvious mistake, the court has the power to intervene for the protection of the mistaken party by the grant of an injunction in exercise of the equitable jurisdiction illustrated by the Ashburton, Goddard and Herbert smith cases. Furthermore, in my view it should ordinarily intervene in such cases, unless the case is one where the injunction can properly be refused on the general principles affecting the grant of a discretionary remedy, for example, on the ground of inordinate delay: see Goddard's case [1986] 3 W.L.R. 734, 745E-F per Nourse L.J. 62In Meltend Pty Limited v Restoration Clinics of Australia Pty Limited (1997) 75 FCR 511 the Federal Court of Australia was concerned with a document listed in the wrong part of the list of documents made on discovery. The solicitor for the opposing party inspected the document and then asked for a copy to be supplied. That request was refused and a belated claim of privilege was made. It was not obvious on the face of the letter discovered that it was privileged. The inspecting party moved the court for an order that it be provided with a copy of the document. Goldberg J found that the applicant's solicitor did not on inspection realise that she had been allowed to see the letter only because of an obvious mistake. His Honour found that there had been a mistake. However, it lay not in inadvertently identifying the document in the wrong part of the list but, with knowledge of the contents of the document, in deciding not to claim privilege. There was simply an error of judgment. So the solicitor for the opposing party read the letter with the consent of the party discovering it. 63After extensive reference to decided cases, including to Guinness Peat Properties Limited v Fitzroy Robinson Partnership , his Honour held that there was an express waiver and alternatively an imputed waiver. Since the disclosure was voluntary, there was no obvious mistake apparent to the inspecting party and there was no fraud, and since inspection had been allowed, his Honour held that the inspecting party ought to be allowed to use the document and to have a copy. 64In Unsworth v Tristar Steering and Suspension Australian Limited [2007] FCA 1081 Gyles J was concerned with the inadvertent disclosure of privileged documents during an urgent and complicated process of discovery. A solicitor handed over two privileged documents, believing that they formed part of a group of documents for which privilege could not be claimed. His Honour was referred to Meltend Pty Limited v Restoration Clinics of Australia Pty Limited and other authorities. His Honour dealt with the decision of Hunt CJ at CL in Director of Public Prosecutions v Kane (1997) 140 FLR 468 which, Gyles J said, provided support for the view that a document sent mistakenly or advertently would not be disclosed voluntarily within the meaning of s122, particularly if the hypothetical reasonable solicitor would have realised that it had been sent by mistake. His Honour referred to the judgment of Sackville J in BT Australasia Pty Limited v State of New South Wales (No.8) (1998) 154 AL 202 at 208 - 209 as supporting the same view. His Honour found that disclosure was inadvertent and that those inspecting the documents must have appreciated, as soon as they appreciated the nature of the documents, the probability of their having been included in the draft bundle by mistake. His Honour held that privilege had not been lost. 65In Sovereign Motor Inns Pty Limited v Bevillesta Pty Limited [2000] NSW SC 521 a solicitor discovering documents prepared a list. Part 2 described by category about 370 documents claimed to be privileged. It did not individually specify those documents. Disclosure of a privileged document occurred not in the list but on the production of documents for inspection. The inspecting solicitor was given access to various boxes and binders. During inspection the solicitor tagged a number of documents for copying, including a letter of advice which fell into a category of documents for which privilege had been claimed but which had been left inadvertently in one of the ring binders produced for inspection. The plaintiff's solicitor said that if he had realised that the document had been left in the binder he would have removed it. Austin J held that there had been an intention to claim privilege which had inadvertently not been put into effect. His Honour found that the solicitor reading the letter must have realised that it was privileged. His Honour held that the letter had not been knowingly and voluntarily disclosed. 66It was submitted by Mr Williams that the very production of the documents without a claim of privilege constituted an implied waiver, being inconsistent with any intention to rely on privilege. I asked counsel whether there were authority to that effect, but none was put forward. The cases show, and Meltend Pty Limited v Restoration Clinics of Australia Pty Limited is merely an example, that while the privilege is that of the party for whom a solicitor acts, there are circumstances in which it is within the ostensible authority of a solicitor to waive privilege: at 523D-E, and see the cases there cited. 67The reported cases almost all deal with documents produced by solicitors under rules of court or by orders of judges. Those cases all concern lists prepared by or under the supervision of solicitors of documents seen by solicitors or under their supervision. So in those cases the solicitors, as agents having the power to claim and waive privilege (notwithstanding what Gibbs CJ said in Attorney General for the Northern Territory v Maurice & Ors ), have actual knowledge of the documents produced and inspected. They show that privilege may be regarded by the court as waived or lost, depending on the circumstances attending each case. I conclude that a statement that the production of a document by a solicitor without claiming privilege necessarily waives privilege is too wide. 68Only one case, Tim Barr Pty Limited v Narui Gold Coast Pty Limited [2008] NSWSC 1070 involved production by a third party. It is of no assistance, however, as production was made with the knowledge and approval of the person claiming privilege. 69The present case is quite different, because the documents were produced by a third party without the knowledge of the owner of the privilege or his solicitors. 70As far as the evidence goes, all Ryan Carlisle Thomas did was produce to the court the subpoena and the documents described in it. They were not Mr Mills' solicitors and had no ostensible authority to waive privilege. All they could have done, in my opinion, and what they should have done, was foreshadow to the Court on production that a claim of privilege might be made and inform Maurice Blackburn that they had produced their duplicate file, which contained documents likely to be the subject of a claim of privilege. 71They did not tell Mr Mills what they were doing. They do not appear to have foreshadowed to the Court that Mr Mills might claim privilege or to have told Maurice Blackburn that they were producing privileged documents. 72Mr Mills, whose privilege it was, did not know that the documents had been produced. His solicitor did not know that they had been produced. 73It was common ground on the hearing of the motion that the documents recorded communications that would ordinarily be regarded as privileged. It was not suggested that a claim of privilege made at the time of production would not have been upheld. Mr Leonard gave this evidence at T23: Q. Once you read the documents, it became quite obvious to you, didn't it, they were privileged? A. I would have claimed privilege over the documents, yes. Q. And once you saw them, you realised that they were privileged? A. Well, as I said, I would have claimed privilege over the documents. Q. My question is this: Once you read those documents, you realised at least some of them, including the statement or record of interview we are talking about here, was privileged; you were in no doubt about that, were you? A. Well, for the document to have been privileged, they would have had to have claimed privilege over the document. What I'm saying is that they didn't claim privilege over the document. ... Q. You don't suggest that privilege doesn't exist unless it is claimed, do you? Is that how you practised at that time? A. I wouldn't have thought it existed if it was waived. Q. Mr Leonard, my question is this: When you read those documents, you knew they were privileged, didn't you? A. That the documents that I would have claimed privilege over, I would have considered privileged. 74And at T24: Q. No, my question is, when you read those documents, you knew they were privileged, didn't you? A. I didn't think they could be privileged if no claim for privilege had been made over them. Q. Is that your serious answer? A. I thought a decision had been made not to claim privilege over the documents. Q. You mean to waive privilege? A. Yes. Q. Do you mean the privilege existed, but it had been waived, is that what you thought? A. Yes. Q. So they were privileged? A. Yes. Q. But you thought privilege had been waived? A. Yes. Q. So when you read the documents, you knew they were privileged, but you thought that privilege had been waived? A. Yes. Q. And you thought that privilege had been waived because they had been produced without a claim for privilege, is that right? A. Yes. Q. And once you read the documents and it became clear in your mind that they were privileged, did you not think it would have been appropriate to contact the plaintiff's solicitor and tell them that you held these documents, but that you would, if privilege were to be claimed, immediately return them unread and you would not rely upon them. Have you not been aware of that sort of practice amongst solicitors in Sydney for many years? A. I didn't think it was necessary. 75In my opinion the circumstances in which the documents were produced without a concurrent claim of privilege did not imply waiver. Those producing them did so under compulsion. They were not Mr Mills' solicitors. It should have been obvious to Mr Leonard that the documents were privileged. Any reasonable person knowing the contents of the documents would have been struck by the lack of a claim of privilege and would have suspected an oversight. 76It is not clear what Mr Leonard believed about privilege. If, as he said at first, it was that there was no privilege until a claim was made, he was wrong. If it was that the absence of a concurrent claim of privilege amounted to a waiver, he was, with respect and for the reasons that I have given, wrong. 77It was not by accident that Mr Leonard served the subpoena on the former solicitors but not on the current solicitors. There was this evidence at T18 and 19: Q. You didn't address a subpoena to Maurice Blackburn to produce their file, did you? A. No. ... Q. But you chose to issue a subpoena to the plaintiff's previous solicitors? A. Yes. Q. Was that on advice? A. Yes. Q. Of senior counsel? A. Yes. Q. And your hope was, wasn't it, that there may be some erroneous production by that firm of the file, because they no longer acted? A. I would have expected that the file would have been produced, but that there may have been a claim for privilege made over the file. Q. Mr Leonard, you would have expected with a very high degree of certainty that any competent solicitor producing a file for an ex-client would produce, as required, but then claim privilege? A. That solicitor or the current solicitors. 78Mr Leonard gave this evidence at T26: Q. Mr Leonard, in your practice to date, although you may from time to time either issue or receive subpoenas aimed at the production of a solicitor's file, you would confidently expect a claim for privilege to be made over the contents of the file or over the privileged contents of the file? A. I would generally expect a claim for privilege to be made over the file, yes. Q. And that's why you didn't subpoena Maurice Blackburn? A. Yes. 79In my opinion the high likelihood that Mr Mills, by his solicitors, would, when they realised the documents had been produced, raise a claim of privilege, and the high probability that such a claim would be sustained, made it necessary for Mr Leonard to adopt a cautious approach. 80At the conclusion of his affidavit Mr Leonard said this: At no time was I notified by the plaintiff's present or former solicitor, of a claim for privilege. Had I been notified of such a claim, I would not have arranged for copies of the documents to be obtained... 81All the evidence was given on affidavit. The affidavits were read and objections were dealt with. Mr Leonard was called to be cross-examined. Mr Williams sought leave to adduce oral evidence in chief going to the question of whether it would have been obvious to Mr Leonard that the failure to claim privilege was an obvious mistake. Mr Williams foreshadowed that Mr Matkovich might also be called to give evidence. He had not provided an affidavit. Leave was opposed. It was then early in the day and the hearing of the motion was expected to take the rest of the day. I granted leave on condition that a further affidavit of Mr Leonard and, if desired, an affidavit of Mr Matkovich, first be produced. Mr Williams said that he anticipated that Mr Leonard would "give a satisfactory answer to the proposition". He did not then press the application for leave. 82Mr Leonard said this in cross-examination, commencing at T24: Q. Are you aware of such a practice whereby, if a solicitor discovers that he has in his hands privileged documents and where he thinks that it is highly likely that a claim for privilege would succeed, then he would have the courtesy to contact his opposite number, tell that person that they were holding these documents and would they like to come and collect them? Are you not aware of such a practice in Sydney for at least the last 30 or 40 years? A. If I believe that it had been done by mistake and it had been accidental, I would certainly contact the other side and advise them of what I believed to be a mistake, but if it is a situation that I didn't think there was a mistake or that they considered there to be a mistake, then I wouldn't think it would be necessary. Q. Mr Leonard, you took advantage of an opportunity that presented itself to you because there had been no claim for privilege, didn't you? A. I wouldn't say I took advantage of the situation. No claim for privilege had been made over the documents. Copies were obtained and I looked at them. Q. You, yourself, realised that those documents may be useful in advancing your client insurer's cause? ... A. I only have a general recollection about the documents at this stage, but I think that's probably a fair assessment that they weren't detrimental to my client's position. Q. They were not detrimental? A. No, no. Q. The production and failure to claim privilege for those documents, you would have viewed as quite a windfall for your client, wouldn't you? A. I don't know whether I would have viewed it as a windfall. I would have viewed it as, that we'd obtained some useful information and again that, just a summary of probably what my thoughts would have been, without being able to - without reading the documents and fully knowing the file at the time, I can't recall all the details of the file and what information I had before me. Q. And may I suggest to you that your view was that it was too valuable a windfall for your client to throw it away by letting the plaintiff's solicitor know that some privileged documents had been produced, without a claim for privilege? That's the true position, isn't it? A. No. As I said, I can't remember now the process that went on, but I'm sure I felt confident at the time that they were aware of the subpoena and whether they had, you know, obtained their own copies of the documents or not, I don't know. ... Q. Mr Leonard, in your practice to date, although you may from time to time either issue or receive subpoenas aimed at the production of a solicitor's file, you would confidently expect a claim for privilege to be made over the contents of the file or over the privileged contents of the file? A. I would generally expect a claim for privilege to be made over the file, yes. Q. And that's why you didn't subpoena Maurice Blackburn? A. Yes. Q. You had no communication from Ryan Carlisle Thomas to suggest that they had any instructions to waive privilege? A. I don't think so, no. Q. And you certainly had no information from the plaintiff's solicitors to the effect that it was all right for you to go ahead and look at the documents that had been produced, did you? A. No. Q. You didn't ask them, did you? A. I didn't ask them specifically, no. Q. And you know what the answer would have been if you had asked, don't you? A. I can't say what the answer would have been. Q. Mr Leonard, if you had asked Maurice Blackburn whether they would waive privilege on a previous solicitor's file so that you could look at it, would you be at all optimistic that they would allow you to do that? A. I wouldn't be optimistic, no. Q. So you didn't ask them, because you knew they would object? A. No, I didn't ask them, because I didn't think it was necessary at the time. They were aware of the subpoena. 83There was this evidence in re-examination at T27: Q. You were asked some questions about whether you were aware of a practice of returning material to another solicitor that was apparently delivered by mistake or without a claim for privilege. Have you been involved in instances such as that yourself before 2006? A. No, no, I haven't. Q. Since that time, have you? A. No. Q. Have you ever been in a situation where you have received material that you thought had been produced by mistake? A. No. I have received material that has intentionally - well, I consider it intentionally provided to me that I have been surprised about receiving, but as I have been satisfied that there is an intent to provide me with that information, I have assumed that, you know, there's no claim for privilege over the information or no objection to me having that information. If it was a situation where someone sent me a letter of advice or something by mistake, I would certainly contact them and let them know and I wouldn't read that advice. 84There was no further application to adduce oral evidence from Mr Leonard. Mr Matkovich did not give evidence. 85In the event, it does not matter what Mr Leonard or Mr Matkovich might have thought about the matter. The question is what the reasonable solicitor would have thought. In my opinion it would have been obvious to a reasonable solicitor in Mr Leonard's position that Mr Wubbeling's documents recorded confidential communications between Mr Mills and his lawyer and between Mr Mills' lawyer and others made for the dominant purposes of Mr Mills' being provided with legal advice and professional legal services: ss118, 119 Evidence Act. 86In the circumstances that the documents had not been produced by Mr Mills' solicitor and in the absence of clear knowledge that Mr Mills' solicitor knew that the documents had been produced, and of their nature, any reasonable solicitor would in my opinion have concluded either that Mr Mills' solicitor did not know that such documents had been produced or that, knowing it, had mistakenly omitted to make a claim of privilege. Such a solicitor would not, in my view, have inspected or used the documents without first telling the solicitors for Mr Mills what his former solicitors had produced and giving them an opportunity to raise a claim of privilege. 87In my opinion there was no waiver of privilege. The use by the insurer of Mr Wubbeling's documents was unfair. The Court's discretion 88Mr Williams approached the motion on the basis that there had been a waiver of privilege when the documents were produced to the court and that Mr Mills was seeking a restoration of the status quo ante . He raised a number of matters that he said would satisfy the court that it should not in the exercise of its discretion restore privilege. Although I am satisfied that there was no waiver of privilege in the mere production of Mr Wubbeling's documents to the court, the discretion of the court must still be exercised. Ultimately it may not matter whether the discretion be described as one to restore or not or, in the circumstances pointed to, to make or refuse to make an otherwise appropriate order. 89The first of the matters raised is delay. Mr Williams drew attention to the four years that elapsed between the production of the documents and the filing of the motion. He submitted that during that time the insurer had inspected and acted on the documents in a significant and material respect. The insurer declined to indemnify Mr Wojcech and Hunt & Hunt ceased to act for him. That led to the joinder of the insurer as a cross-defendant. To make the orders sought in those circumstances would cause the insurer irremedial prejudice and limit its ability to continue to decline indemnity. The insurer would suffer the costs incurred over the period of the delay as a result of acting upon the material produced. 90The parties joined issue on the demand for the return of the documents to the court when Hunt & Hunt refused to do so in their letter of 17 March 2009. Because they did not know about the documents until the settlement conference, Maurice Blackburn had no cause to bring the matter into court before then. They did not commence this motion until 17 September 2010. Allowing a reasonable time after receipt of the letter of 17 March 2009 to obtain instructions and prepare evidence, the delay in bringing the motion was not far short of 18 months. 91I do not accept that the insurer's use of the documents, leading to the denial of indemnity and the change of parties that followed, was in any way attributable to delay on Mr Mills' part. Those things all happened before Maurice Blackburn knew that the insurer had the documents. They were attributable directly and only to the insurer's unfair use of Mr Wubbeling's documents. If the insurer has incurred additional costs as a consequence, it should bear those costs. 92There still remains, however, a delay of almost 18 months. It was not submitted and the evidence does not suggest, that the claims of privilege made in the letters of 4 November 2008 and 14 January 2009 were abandoned or that the insurer took any step in the belief that there was no longer any opposition to its use of Mr Wubbeling's documents. Mr Williams did submit, however, that the insurer had been exposed to a potential costs order in favour of Mr Wojcech if it lost the cross-claim. The costs would be significant. As I have said, these considerations all result from the initial use of Mr Wubbeling's documents. The costs ought to fall on the insurer. 93Finally, Mr Williams submitted that the insurer had lost the opportunity of engaging in settlement negotiations with Mr Mills. 94Two things may be said about that. First, the denial of such an opportunity was the direct and inevitable consequent of the insurer's use of the documents. Secondly, it seems unlikely that the insurer would have wished so to engage in the light of the fact that it now defends the case upon a basis independent of anything disclosed in Mr Wubbeling's documents, namely that Mr Wojcech did not have the consent of the insured, Mr Mills Senior, when he drove the boat. During 2004 Abbott Tout, who then represented the insurer, obtained an investigator's report into the accident. The report incorporated statements of, Mr David Mills, the owner of the boat driven by Mr Wojcech, of Mr Wojcech and of Mr Wallis. Following receipt of the report the insurer agreed to indemnify Mr Mills. 95Given that the insurer previously agreed to indemnify Mr Wojcech, having seen the comprehensive report of its investigator, the raising of this defence throws doubt on the assertion implied in Mr Williams' submission that the insurer would have been willing to negotiate a settlement with Mr Mills. 96In the circumstances I would not give much weight to any loss of opportunity to the insurer to negotiate a settlement. 97Like the first, the remaining submissions were based on notions of fairness. It was submitted that if the insurer were unable to use information that had come to it by inspection of the documents produced, information now out in the open would become unavailable. The insurer would become unable to rely on Mr Wojech's exculpatory statement. That, it was submitted, would amount to a fraud on the insurer. 98It seems to me that since the knowledge the insurer has of the conversations in Mr Wubbeling's office came to it only because the solicitor it instructed acted unfairly the insurer must suffer the consequences. It came by information it was not entitled to have. Fairness requires that it not use the information. There will be no fraud. 99Then it was submitted that not to allow the insurer to use the material would deceive the Court. The evidence would put forward one version of the facts, whereas the facts were otherwise. 100I do not find that an attractive submission. If the documents had not been produced or if on their production a successful claim of privilege had been made, there would still be documents in the file recording what the participants said. The only difference would be that the insurer did not know about them. It would not then be said, I think, that if the case were conducted without reference to anything said in Mr Wubbeling's office, the court was deceived. Courts decide issues only on evidence put before them in an adversarial system. Parties routinely conceal evidence or, by objecting, succeeding in keeping evidence out of consideration which, if available to be considered by the Court, might damage their case. The Court is not said to be deceived in the working out of these processes. 101Mr Williams relied on the judgment of Walsh J in Pitts v Adney [1961] NSWR 535. In that case it was held that the withholding from the court of evidence of a without prejudice offer of settlement deceived the court about the facts. It was submitted that the case supported the submission that to withhold evidence of the conversations in Mr Wubbeling's office would similarly deceive the court. 102In Pitts v Adney the plaintiff was a landlord moving for an order for possession of land governed by the Landlord and Tenant (Amendment) Act , 1948. The Act provided that the plaintiff could not succeed on the ground on which she moved unless the court were satisfied that the premises had been offered for sale to the tenant on terms and conditions which the court considered fair and reasonable. So evidence was put before the magistrate of an offer by the landlord to accept 5,300 and a counter-offer by the defendant to pay 4,250. The magistrate found the plaintiff's offer fair and reasonable. Concerned that there was likely to be hardship on both sides, the magistrate invited counsel to confer before orders were made. At a conference that then took place the tenant increased her offer to 5,300.00, matching the plaintiff's original offer. The plaintiff refused to accept the offer. The magistrate was not told because defendant's counsel considered that the offers had been made without prejudice and were privileged. Assuming that the position on the parties' offer and counter-offer were as he had been told in evidence, the magistrate made an order for possession. After a rescission motion the matter was bought into this court on a Case Stated. Walsh J held that the magistrate had been misled into believing, before the orders were made, that no offer of $5,300.00 had been made by the defendant. 103Walsh J said at 539: It is of importance that the rule protecting from disclosure, discussions taking place in an endeavour to put an end to pending litigation should, in general, be applied. But it is, after all, a rule based upon public policy. It cannot be permitted to put a party into the position of being able to cause a court to be deceived as to the facts, by shutting out evidence which would rebut inferences upon which that party seeks to rely. 104His Honour went on to consider McFadden v Snow (1951) 69 WN NSW 8. 105It seems to me that none of this supports the contention that the court hearing this case will be misled if not informed about the conversations in Mr Wubbeling's office. The parties in Pitts v Adney were obliged by statute to adduce evidence of offers. There is no obligation on any party to adduce evidence of the conversations the subject of this motion to the court hearing the matter. The court hearing the matter will not know that there were any such conversations and will be making no assumptions about them about which it could be misled. 106Finally Mr Williams submitted that the parties could not be restored to their original positions. He drew attention to the difficulty counsel and solicitor were likely to have in the conduct of the case knowing the content of the conversations and being unable to refer to them or otherwise use them. Reference was made to a decision of Brereton J in Grace v Grace (2010) NSWSC 1514. 107The discretion in Grace v Grace was exercised on the facts of that case, of course, which were different from those of the instant case. I accept that there will be cases where the difficulty resulting to counsel is so great as to make it close to impossible for them properly to carry out their function at the forthcoming trial and that that may weigh in determining how the discretion is to be exercised. But I am not persuaded that this is a case of that kind. On what I know of the facts of the case it seems quite possible for counsel to cross-examine Mr Mills, Mr Wojcech and Mr Wallis on the events leading up to Mr Mills' injuries without the need to refer to anything said by any of them in Mr Wubbeling's office. 108It seems to me that any relevant difficulty in conducting the case experienced by those instructed by the insurer will be one of the insurer's own making. If the insurer has suffered a detriment, that cannot ground the exercise of the discretion in the insurer's favour. 109There is one further matter. No reference was made to it in the motion heard before me, though Mr Bartley, Senior Counsel for Mr Mills, made a passing reference to conflict. Hunt & Hunt now act against Mr Wojcech, though they previously acted for him. If Hunt & Hunt were because of any conflict of interest to cease to represent the insurer, any embarrassment of any solicitor from that firm conducting the case and knowing about the conversations would be removed. But these are matters of surmise, and in the absence of evidence and submissions about them, the matter can be taken no further. 110For these reasons I have come to the view that Mr Mills' privilege in the conversations recorded in the documents produced on subpoena has not been lost. I would not exercise my discretion, for the reasons given, against making a declaration to that effect and ordering that the documents be returned to the court. If it were found that privilege had been lost I would exercise my discretion, for the reasons that I have given, and restore it. 111In the orders sought the documents are described as "the file and records produced to the court by Ryan Carlisle Thomas Lawyers on or about 28 September 2006". That description is too wide and is apt to include documents which are not privileged and which ought not to be ordered to be returned. The documents in respect of which I intend to make a declaration and order are the handwritten notes made by Mr Wubbeling in conference with Mr Mills, Mr Wojcech and Mr Wallis and the typed summary that Mr Wubbeling produced from his notes. It is possible that there are associated documents recording things said at the conference and produced in obedience to the subpoena. I shall frame the declaration and order accordingly. 112I make the following declaration and orders: (1) Declare that the documents produced to the court by Ryan Carlisle Thomas Lawyers on or about 29 September 2006, being notes written by Mr Sam Wubbeling of things said in conferences held on 5 July 2004 between Mr Wubbeling, Timothy Mills, Walter Wojcech and Keith Leslie Wallis and the typed memorandum produced from those notes on 7 July 2004 as well as any other document recording anything said at those conferences, are documents to which client legal privilege attaches and constitute confidential communications for the dominant purpose of Ryan Carlisle Thomas Lawyers providing legal professional advice to the plaintiff; (2) Order that the defendant and the cross-defendant return to this Court the original and all copies of any such documents held by them derived from the file and records of Ryan Carlisle Thomas Lawyers; (3) Order that the costs of this motion be costs in the proceedings. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 February 2011